As at As at
Note 31-Jan-11 31-Jul-10
RM'000 RM'000
Assets
Cash and short term funds 1,105,047 1,148,293
Deposits and placements with banks and other financial institutions 159,039 140,246
Securities held-for-trading A8 574,882 503,808
Securities available-for-sale ("AFS") A9 713,772 470,181
Securities held-to-maturity A10 457,056 465,323
Loans, advances and financing A11 691,703 611,509
Clients' and brokers' balances A12 312,611 205,994
Derivative assets 16,950 14,111
Other assets A13 62,943 41,206
Statutory deposits with Central Banks 28,884 20,741
Tax recoverable 7,170 14,393
Deferred tax assets 10,731 7,461
Investment in an associate 3,392 3,284
Property, plant and equipment 56,038 55,267
Investment properties 52,960 53,081
Intangible assets 162,509 162,509
Total assets 4,415,687 3,917,407
Liabilities
Deposits from customers A14 610,901 589,461
Deposits and placements of banks and other financial institutions A15 1,777,594 1,532,003
Clients' and brokers' balances 319,923 209,865
Derivative liabilities 20,260 21,989
Other liabilities A16 419,168 325,670
Taxation 10,229 4,485
Deferred tax liabilities 718 867
Borrowings A17 399,200 407,500
Total liabilities 3,557,993 3,091,840
Equity
Share capital 265,845 265,845
Reserves 591,491 560,064
Treasury shares, at cost (16,061) (16,061)
841,275 809,848
Minority interests 16,419 15,719
Total equity 857,694 825,567
Total liabilities and equity 4,415,687 3,917,407
Net assets per share attributable to equity holders
of the Company (RM) 3.30 3.17
The condensed financial statements should be read in conjunction with the most recent audited financial
statements for the financial year ended 31 July 2010.
HWANG-DBS (MALAYSIA) BERHAD
(Company no. 238969-K)
CONDENSED FINANCIAL STATEMENTS
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 JANUARY 2011
1
3 months 3 months 6 months 6 months
ended ended ended ended
Note 31-Jan-11 31-Jan-10 31-Jan-11 31-Jan-10
RM'000 RM'000 RM'000 RM'000
109,608 86,377 205,974 173,366
Interest income A18 47,616 39,855 95,596 78,220
Interest expense A19 (23,383) (17,013) (46,154) (32,264)
Net interest income 24,233 22,842 49,442 45,956
Other operating income A20 70,396 47,058 125,570 97,077
94,629 69,900 175,012 143,033
Other operating expenses A21 (59,824) (44,329) (108,877) (87,923)
34,805 25,571 66,135 55,110
(Allowance)/Write back of allowance for
losses on:
- loans, advances and financing A22 (2,391) (1,032) (3,896) (6,661)
- clients' balances and receivables A23 275 78 505 295
Impairment loss on securities AFS - - - (650)
32,689 24,617 62,744 48,094
Share of results of an associate,
net of tax 91 (121) 109 (469)
Profit before taxation 32,780 24,496 62,853 47,625
Taxation B6 (8,212) (6,820) (15,720) (12,673)
Profit for the financial period 24,568 17,676 47,133 34,952
Attributable to:
Equity holders of the Company 23,176 16,840 44,670 33,141
Minority interests 1,392 836 2,463 1,811
24,568 17,676 47,133 34,952
Earnings per share attributable to
equity holders of the Company (sen)
- Basic B15 9.08 6.60 17.51 12.99
Operating revenue
The condensed financial statements should be read in conjunction with the most recent audited financial statements for
the financial year ended 31 July 2010.
HWANG-DBS (MALAYSIA) BERHAD
(Company no. 238969-K)
FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
Individual Quarter Cumulative Quarter
UNAUDITED CONSOLIDATED INCOME STATEMENT
CONDENSED FINANCIAL STATEMENTS
2
3 months 3 months 6 months 6 months
ended ended ended ended
31-Jan-11 31-Jan-10 31-Jan-11 31-Jan-10
RM'000 RM'000 RM'000 RM'000
24,568 17,676 47,133 34,952
Other comprehensive income for the
financial period, net of tax:
Currency translation differences arising
from foreign operations (1,804) (56) (4,364) (2,194)
Securities AFS:
- net change in fair value 495 412 2,065 1,584
- net gain transferred to income statement
on disposal (997) (685) (1,649) (1,250)
(2,306) (329) (3,948) (1,860)
Total comprehensive income for the financial period 22,262 17,347 43,185 33,092
Attributable to:
Equity holders of the Company 20,870 16,511 40,722 31,281
Minority interests 1,392 836 2,463 1,811
22,262 17,347 43,185 33,092
Profit for the financial period
The condensed financial statements should be read in conjunction with the most recent audited financial statements for
the financial year ended 31 July 2010.
HWANG-DBS (MALAYSIA) BERHAD
(Company no. 238969-K)
FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
Individual Quarter Cumulative Quarter
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONDENSED FINANCIAL STATEMENTS
3
Foreign
Number of Nominal Treasury Share Statutory AFS exchange Retained Minority Total
Note shares value shares premium reserve reserve reserve profits Sub-total interests equity
'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
At 1 August 2010
As previously reported 255,159 265,845 (16,061) 33,090 80,132 2,912 (9,526) 453,456 809,848 15,719 825,567
Effects of adoption of FRS 139 A1(d) - - - - - - - 273 273 - 273
As restated 255,159 265,845 (16,061) 33,090 80,132 2,912 (9,526) 453,729 810,121 15,719 825,840
Profit for the financial period - - - - - - - 44,670 44,670 2,463 47,133
Other comprehensive income for the financial period - - - - - 416 (4,364) - (3,948) - (3,948)
Total comprehensive income for the financial period - - - - - 416 (4,364) 44,670 40,722 2,463 43,185
Final dividend for the financial year ended 31 July 2010 - - - - - - - (9,568) (9,568) - (9,568)
Dividend paid by a subsidiary to minority interests - - - - - - - - - (1,763) (1,763)
At 31 January 2011 255,159 265,845 (16,061) 33,090 80,132 3,328 (13,890) 488,831 841,275 16,419 857,694
At 1 August 2009 255,168 265,845 (16,046) 33,090 61,321 1,574 (768) 425,746 770,762 13,921 784,683
Profit for the financial period - - - - - - - 33,141 33,141 1,811 34,952
Other comprehensive income for the financial period - - - - - 334 (2,194) - (1,860) - (1,860)
Total comprehensive income for the financial period - - - - - 334 (2,194) 33,141 31,281 1,811 33,092
Shares repurchased held as treasury shares at cost (5) - (8) - - - - - (8) - (8)
Final dividend for the financial year ended 31 July 2009 - - - - - - - (9,569) (9,569) - (9,569)
Dividend paid by a subsidiary to minority interests - - - - - - - - - (1,763) (1,763)
At 31 January 2010 255,163 265,845 (16,054) 33,090 61,321 1,908 (2,962) 449,318 792,466 13,969 806,435
The condensed financial statements should be read in conjunction with the most recent audited financial statements for the financial year ended 31 July 2010.
ordinary shares of RM1 each
Attributable to Equity Holders of the Company
HWANG-DBS (MALAYSIA) BERHAD
(Company no. 238969-K)
CONDENSED FINANCIAL STATEMENTS
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
Issued and fully paid
4
6 months 6 months
ended ended
31-Jan-11 31-Jan-10
RM'000 RM'000
Profit for the financial period 47,133 34,952
Adjustments for:
Non-cash items 47,218 43,418
Non-operating items - investing (29,495) (21,217)
Non-operating items - financing 8,626 6,159
73,482 63,312
Changes in working capital:
Net changes in operating assets (293,304) (372,092)
Net changes in operating liabilities 406,105 674,747
186,283 365,967
Interest paid (36,894) (23,366)
Tax paid (5,924) (7,660)
Net operating cash flow 143,465 334,941
Investing activities
Net purchase of securities (240,499) (58,828)
Interest received from securities 22,393 17,078
Dividends and income distributions received 2,530 1,681
Rental received 640 -
Acquisition of other investments (16) -
Proceeds from disposal of other investments 7 12
Property, plant and equipment (4,474) (2,861)
Net investing cash flow (219,419) (42,918)
Financing activities
Dividend paid (9,568) (9,569)
Dividend paid by a subsidiary to minority interests (1,763) (1,763)
Interest paid (6,472) (2,608)
Net (repayment)/drawdown of borrowings (8,300) 17,000
Shares repurchased - (8)
Net financing cash flow (26,103) 3,052
Net change in cash and cash equivalents (102,057) 295,075
Foreign exchange differences (3,383) (706)
Cash and cash equivalents at beginning of the financial period 862,364 527,520
Cash and cash equivalents at end of the financial period 756,924 821,889
Cash and cash equivalents at end of the financial period comprise:
Cash and short term funds 756,924 821,889
FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
The condensed financial statements should be read in conjunction with the most recent audited financial
statements for the financial year ended 31 July 2010.
HWANG-DBS (MALAYSIA) BERHAD
(Company no. 238969-K)
CONDENSED FINANCIAL STATEMENTS
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
5
A. Explanatory Notes in accordance with Financial Reporting Standard ("FRS") 134
A1 Basis of Preparation
FRS
Leases
Revenue
(a)
Amendment to FRS 123 Borrowing Costs
Amendments to FRS 139 Financial Instruments: Recognition and Measurement
Amendment to FRS 134
Amendment to FRS 136
Amendments to FRS 138
Interim Financial Reporting
Impairment of Assets
Intangible Assets
Hedges of a Net Investment in a Foreign Operation
Reassessment of Embedded Derivatives
Interim Financial Reporting and Impairment
Group and Treasury Share Transactions
IC Interpretation 16
Amendment to FRS 140
IC Interpretation 9
IC Interpretation 10
IC Interpretation 11
The adoption of the above FRSs does not give rise to any material financial effects to the Group, other than the
effects and changes in accounting policies as disclosed below and in explanatory note A27.
Amendment to FRS 8
Amendment to FRS 107
Amendment to FRS 110
Amendment to FRS 116
Amendment to FRS 117
Amendment to FRS 118
Investment Property
Amendments to FRS 132 Financial Instruments: Presentation
Property, Plant and Equipment
Consolidated and Separate Financial Statements
Investments in Associates
Statement of Cash Flows
Events after the Balance Sheet Date
Amendments to FRS 7 Financial Instruments: Disclosures
Operating Segments
HWANG-DBS (MALAYSIA) BERHAD
(Company no. 238969-K)
The interim financial report is unaudited and has been prepared in accordance with the Financial Reporting
Standard ("FRS") 134 on "Interim Financial Reporting" and Chapter 9, Part K of the Bursa Malaysia Securities
Berhad Main Market Listing Requirements. The interim financial report should be read in conjunction with the
most recent audited financial statements for the financial year ended 31 July 2010.
The accounting policies and methods of computation adopted for this interim financial report are consistent
with those adopted in the annual financial statements for the financial year ended 31 July 2010 except for the
changes in accounting policies arising from adoption of the BNM Guidelines on Classification and Impairment
Provisions for Loans/Financing and the following new/revised Financial Reporting Standards and
Interpretations ("FRSs") that are effective for the Group for the financial year ending 31 July 2011:
NOTES TO THE INTERIM FINANCIAL REPORT FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
Description
FRS 7
FRS 101
FRS 123
FRS 139
Amendments to FRS 5
Amendments to FRS 127
Borrowing Costs
FRS 7, Financial Instruments: Disclosures
FRS 7 requires disclosure of quantitative and qualitative information about exposure to risks arising from
financial instruments, including minimum disclosures about credit risk, market risk and liquidity risk in the
financial statements of the Group for the annual financial period commencing 1 August 2010.
The standard also requires disclosure of income, expenses, gains or losses by categories of financial assets
and liabilities. Certain comparative disclosures of income, expenses, gains and losses of the Group have been
restated to conform with the current financial period's presentation.
FRS 3 Business Combinations
IC Interpretation 17 Distribution of Non-Cash Assets to Owners
Amendment to FRS 128
Presentation of Financial Statements
Financial Instruments: Recognition and Measurement
Financial Instruments: Disclosures
Non-current Assets Held for Sale and Discontinued Operations
6
HWANG-DBS (MALAYSIA) BERHAD
(Company no. 238969-K)
NOTES TO THE INTERIM FINANCIAL REPORT FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
A1 Basis of Preparation (cont'd)
(b)
(c)
(i) Impairment of loans, advances and financing and receivables
FRS 139, Financial Instruments: Recognition and Measurement
Prior to the adoption of FRS 139, the loan loss allowances of the investment banking subsidiary and
commercial banking subsidiary were determined in accordance with the Guidelines on Classification of
Non-Performing Loans and Provision for Substandard, Bad and Doubtful Debts issued by BNM ("Revised
BNM/GP3") and the minimum requirements as prescribed by the National Bank of Cambodia respectively.
The moneylending subsidiary followed the general guidelines as set out in the Revised BNM/GP3 in so far
as it relates to the parameters for periods of default and provisioning rates. The policies on identification
of non-performing accounts, specific allowance for bad and doubtful debts and suspension of interest
in respect of clients' and brokers' balances of the investment banking subsidiary were in accordance with
the Rules of Bursa Malaysia Securities Berhad ("Rules of Bursa Securities"). Other receivables were stated
at anticipated realisable values.
FRS 139 establishes principles for recognising and measuring financial assets, financial liabilities and some
contracts to buy and sell non-financial items. Prior to the adoption of FRS 139, the accounting policies of the
Group had incorporated requirements of BNM/GP8, which include selected principles of FRS 139 in respect of
recognition, derecognition and measurement of securities and derivative instruments. The adoption of FRS 139
has resulted in changes in accounting policies as follows:
FRS 101, Presentation of Financial Statements
The revised FRS 101 requires an entity to present, in the statement of changes in equity, all 'owner changes in
equity'. All 'non-owner changes in equity' (i.e. comprehensive income) are to be presented in one statement of
comprehensive income or in two statements (i.e. a separate income statement and a statement of
comprehensive income). The Group has adopted the two statements approach. All 'non-owner changes in
equity' which were previously presented in the consolidated statement of changes in equity are now included in
the statement of comprehensive income as other comprehensive income. In addition, reclassification
adjustments, which represent amounts previously recognised in other comprehensive income and
subsequently reclassified to profit or loss, together with the related tax effects have to be disclosed.
Comparative presentation of the financial statements of the Group have been restated to conform with the
current financial period's presentation.
Individual impairment assessment is performed on financial assets that are individually significant.
Financial assets which are homogeneous or not individually significant are grouped as a portfolio
according to their credit risk characteristics for the purposes of calculating an estimated collective loss
based on collective impairment assessment, taking into account the historical loss experience of such
assets.
FRS 139 requires an entity to assess at each balance sheet date either individually or collectively whether
there is objective evidence that financial assets, which are stated at amortised cost or cost (including
loans, advances and financing, clients' and brokers' balances and receivables), are impaired. Financial
assets are impaired if, and only if, there is objective evidence of impairment as a result of one or more
events ('loss event') that has occurred and that the loss event has an impact on future estimated cash
flows of the financial assets that can be reliably estimated. Impairment loss is calculated as the difference
between the carrying amount and the present value of future expected cash flows discounted at the
original effective interest rate of the financial assets. The carrying amount of the impaired financial assets
is reduced through the use of an allowance account and the amount of the loss is recognised in the
income statement.
7
HWANG-DBS (MALAYSIA) BERHAD
(Company no. 238969-K)
NOTES TO THE INTERIM FINANCIAL REPORT FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
A1 Basis of Preparation (cont'd)
(c)
(i) Impairment of loans, advances and financing and receivables (cont'd)
(ii) Recognition of interest income
(iii) Recognition of embedded derivatives
In accordance with the transitional arrangements under the Amendments to FRS 139, BNM has prescribed
an alternative basis for collective impairment assessment in respect of loans/financing for banking
institutions during the transitional period (applicable till the financial year ending 31 July 2012), as set out
in the BNM Guidelines on Classification and Impairment Provisions for Loans/Financing, whereby banking
institutions are required to maintain collective impairment allowance of at least 1.5% of the total
outstanding loans/financing, net of individual impairment allowance. Subject to prior written approval by
BNM, banking institutions are allowed to maintain a lower collective impairment allowance. Collective
impairment allowances of the banking subsidiaries of the Company are arrived at based on the transitional
provisions as prescribed by BNM.
Prior to the adoption of FRS 139, interest on loans, advances and financing was recognised in the income
statement at contractual interest rates. FRS 139 requires interest income to be recognised using effective
interest rates ("EIR"), which are the rates that exactly discount the estimated future cash receipts through
the expected life of a loan or, when appropriate, a shorter period to the net carrying amount of the loan.
The changes in accounting policies arising from adoption of FRS 139 have been applied prospectively. In
accordance with the transitional provisions of FRS 139, the effects of adoption of FRS 139 on the carrying
values of financial instruments as at the beginning of the financial period are adjusted to retained profits as at 1
August 2010, as disclosed in explanatory note A1(d) below.
Prior to the adoption of FRS 139, interest accrued and recognised as income prior to the date of a loan
account or clients’ balances arising from stockbroking business are classified as non-performing was
reversed out of income by debiting the interest income in the income statement and crediting the accrued
interest receivable account or interest-in-suspense in the statements of financial position. Subsequently,
interest earned on non-performing accounts is recognised on a cash basis. Upon adoption of FRS 139,
once a loan or a client's balance has been written down as a result of an impairment loss, interest income
is thereafter recognised using the rate of interest used to discount the future cash flows for the purpose of
measuring impairment loss.
In accordance with FRS 139 and IC Interpretation 9, embedded derivatives are to be separated from the
host contract and accounted for as a derivative if the economic characteristics and risks of the embedded
derivative are not closely related to that of the host contract and the fair value of the embedded derivatives
can be reliably measured at inception. Previously, embedded derivatives were not separately recognised
and accounted for as derivatives.
As at the beginning of the financial period, the Group does not have any embedded derivatives, which are
not closely related to the host contracts and which require bifurcation.
For loans/financing which are individually assessed for impairment, the BNM Guidelines on Classification
and Impairment Provisions for Loans/Financing also stipulate that objective evidence of impairment is
deemed to exist and a loan shall be classified as impaired when principal or interest or both are past due
for 3 months or more or when a loan which is in arrears for less than 3 months exhibit indications of credit
weaknesses. Impairment classification in respect of clients' and brokers' balances of the investment
banking subsidiary is guided by the Rules of Bursa Securities.
FRS 139, Financial Instruments: Recognition and Measurement (cont'd)
8
HWANG-DBS (MALAYSIA) BERHAD
(Company no. 238969-K)
NOTES TO THE INTERIM FINANCIAL REPORT FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
A1 Basis of Preparation (cont'd)
(d) Effects of Changes in Accounting Policies
As at
1-Aug-10
RM'000
Retained profits Dr./(Cr.)
As previously reported (453,456)
Effects of adoption of FRS 139:
Impairment of loans, advances and financing and receivables (2,777)
Recognition of interest income 2,504
(273)
As restated (453,729)
A2 Auditors' Report
A3 Seasonal or Cyclical Factors
A4 Exceptional Items
A5 Changes in Estimates
A6 Debts and Equity Securities
The auditors' report of the most recent annual financial statements of the Group for the financial year ended 31
July 2010 was not subject to any qualification.
There are no issuance, cancellations, repurchase, resale and repayments of debt and equity securities for the
financial period ended 31 January 2011 except as disclosed in explanatory note A30.
The operations of the Group were not materially affected by any seasonal or cyclical factors except for the
stockbroking operation which is dependent on the stock market performance.
There are no material changes in accounting estimates used in the preparation of the interim financial report
for the current quarter and financial period ended 31 January 2011 as compared with the prior financial year.
There are no exceptional items for the current quarter and financial period ended 31 January 2011.
9
HWANG-DBS (MALAYSIA) BERHAD
(Company no. 238969-K)
NOTES TO THE INTERIM FINANCIAL REPORT FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
A7 Dividends
(a)
(b)
The Board of Directors has declared an interim dividend of 5.0 sen per ordinary share, less 25% income tax,
amounting to RM9,568,459 based on the issued and paid-up share capital of the Company as at 31 January
2011, in respect of the current financial year ending 31 July 2011. (Previous financial year ended 31 July 2010:
Interim dividend of 2.5 sen was declared).
NOTICE IS HEREBY GIVEN THAT an interim dividend of 5.0 sen per ordinary share, less 25% income tax will
be payable to shareholders of the Company registered in the Record of Depositors at the close of business on
15 April 2011. The said dividend will be paid on 5 May 2011.
A depositor shall qualify for entitlement only in respect of:
shares transferred into the depositor’s securities account before 4.00 pm on 15 April 2011 in respect of
ordinary transfers; and
A final dividend of 5.0 sen per ordinary share, less 25% income tax, amounting to RM9,568,459 in respect of
the previous financial year ended 31 July 2010 was paid on 20 December 2010.
shares bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of
Bursa Securities.
10
A8 Securities Held-For-Trading
As at As at
31-Jan-11 31-Jul-10
RM'000 RM'000
At fair value
Quoted in Malaysia:
Shares, warrants and REITs 26,416 21,068
Unit trusts 15,380 15,465
41,796 36,533
Unquoted:
In Malaysia
Negotiable instruments of deposits - 50,000
Bankers' acceptances 134,535 45,461
Malaysian Government Treasury Bills - 29,866
BNM Monetary Notes - 99,532
BNM Islamic Monetary Notes 169,201 -
Private and Islamic debt securities 204,925 218,360
Outside Malaysia
Private debt securities 24,425 24,056
574,882 503,808
A9 Securities Available-For-Sale ("AFS")
As at As at
31-Jan-11 31-Jul-10
RM'000 RM'000
At fair value
Quoted in Malaysia:
Shares, warrants and REITs 18,641 17,104
Unit trusts 111,666 55,874
130,307 72,978
Unquoted:
In Malaysia
Malaysian Government Sukuk 6,398 6,632
Private and Islamic debt securities 489,609 390,081
Outside Malaysia
Private debt securities 80,845 -
Investment fund 6,123 -
At cost
Unquoted:
Shares 1,140 1,140
714,422 470,831
Accumulated impairment loss (650) (650)
713,772 470,181
(i)
(ii)
HWANG-DBS (MALAYSIA) BERHAD
NOTES TO THE INTERIM FINANCIAL REPORT FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
Included in the securities AFS are:
(Company no. 238969-K)
quoted shares amounting to RM18.0 million (At 31 July 2010: RM17.1 million) held under funds under
management placed by the Company with a subsidiary, HwangDBS Investment Management Berhad
("HDBSIM"), which is given the discretionary powers within certain guidelines to invest the funds; and
investments in unit trust funds managed by a subsidiary, HDBSIM, at a carrying amount of RM95.1 million
(At 31 July 2010: RM54.4 million) as at the end of the reporting period.
11
HWANG-DBS (MALAYSIA) BERHAD
NOTES TO THE INTERIM FINANCIAL REPORT FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
(Company no. 238969-K)
A10 Securities Held-To-Maturity
As at As at
31-Jan-11 31-Jul-10
RM'000 RM'000
At amortised cost
Unquoted
In Malaysia
Malaysian Government Securities 70,205 70,643
Private and Islamic debt securities 275,541 279,558
Outside Malaysia
Private debt securities 111,310 115,122
457,056 465,323
As at As at
31-Jan-11 31-Jul-10
RM'000 RM'000
Carrying amount 386,851 394,680
Fair value 423,318 427,930
In a prior financial year, the Group has reclassified certain securities held-for-trading to held-to-maturity
category with retrospective effect to 1 August 2008 following the guidance as set out in the BNM Circular,
“Reclassification of Securities under Specific Circumstances” as a consequence of the illiquid market then,
which resulted in the Group no longer holding these securities for purpose of selling or trading over the near
term. The fair value of the reclassified securities, which remained in the held-to-maturity category as at the
end of the reporting period, amounted to RM397.5 million (At 31 July 2010: RM397.5 million) as at the date
of reclassification, at an effective interest rate of 6.69% (At 31 July 2010: 6.69%) per annum.
The carrying amount and fair value of securities held-to-maturity reclassified from held-for-trading category
as at the end of the reporting period are as follows:
There is no fair value gain or loss being recognised in the current financial period in respect of the
reclassified securities. There is no significant change in the estimated amount of cash flows that the Group
expects to recover from the reclassified securities.
12
A11 Loans, Advances and Financing
As at As at
31-Jan-11 31-Jul-10
RM'000 RM'000
(a) By Type
At amortised cost
Term loans
- housing loans 4,770 2,338
- bridging loans 28,626 8,550
- syndicated term loans 92,335 85,834
- other term loans 459,839 460,555
Overdrafts 1,447 171
Share margin financing 301,664 259,300
Other financing 60 -
888,741 816,748
Unearned interest (176,426) (182,827)
712,315 633,921
Allowances for losses on loans, advances and financing:
- collective impairment allowance (10,283) -
- individual impairment allowance (10,329) -
- general allowance - (9,251)
- specific allowance - (13,161)
Net loans, advances and financing 691,703 611,509
(b) By Type of Customer
Domestic business enterprises
- others 220,757 159,021
Individuals 264,709 247,571
Other domestic entities 196,299 206,745
Foreign business enterprises 5,174 3,499
Foreign individuals 25,376 17,085
712,315 633,921
(c) By Geographical Distribution
Malaysia 682,319 613,979
Cambodia 22,416 12,274
Hong Kong 5,525 2,566
Singapore 214 3,779
Other countries 1,841 1,323
712,315 633,921
(d) By Interest Rate Sensitivity
Fixed rate
- other fixed rate loans/financing 586,584 537,198
- housing loans 4,770 2,338
Variable rate
- base-lending rate plus 27,839 10,054
- cost-plus 93,122 84,331
712,315 633,921
HWANG-DBS (MALAYSIA) BERHAD
(Company no. 238969-K)
NOTES TO THE INTERIM FINANCIAL REPORT FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
13
HWANG-DBS (MALAYSIA) BERHAD
(Company no. 238969-K)
NOTES TO THE INTERIM FINANCIAL REPORT FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
A11 Loans, Advances and Financing (cont'd)
As at As at
31-Jan-11 31-Jul-10
RM'000 RM'000
(e) By Purpose
Purchase of landed properties
- residential 4,770 2,338
- non-residential 1,914 544
Purchase of fixed assets other than land and building 367 -
Construction 4,373 2,579
Real estates 1,415 1,213
Purchase of securities 356,314 308,195
Working capital 48,583 42,104
Personal use 216,532 229,327
Others 78,047 47,621
712,315 633,921
(f) By Residual Contractual Maturity
Within 1 year 416,082 346,540
1 year to 3 years 39,283 25,487
3 years to 5 years 16,401 14,027
Over 5 years 240,549 247,867
712,315 633,921
(g) Impaired/Non-Performing Loans, Advances
and Financing by Purpose
Purchase of securities 1,605 1,678
Working capital 8,897 8,550
Personal use 16,312 3,899
26,814 14,127
(h) Impaired/Non-Performing Loans, Advances and
Financing by Geographical Distribution
Malaysia 26,467 14,127
Cambodia 347 -
26,814 14,127
(i) Movements in Impaired/Non-Performing Loans,
Advances and Financing
At beginning of the financial period
- as previously reported 14,127 13,143
- effects of adoption of FRS 139 1,004 -
- as restated 15,131 13,143
Classified as impaired/non-performing 14,696 7,429
Reclassified as non-impaired/performing (364) (154)
Amount recovered (641) (2,174)
Amount written off (2,008) (4,117)
At end of the financial period 26,814 14,127
Gross impaired/non-performing loans, advances and financing as a % of gross loans, advances and financing 3.8% 2.2%
14
HWANG-DBS (MALAYSIA) BERHAD
(Company no. 238969-K)
NOTES TO THE INTERIM FINANCIAL REPORT FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
A11 Loans, Advances and Financing (cont'd)
As at As at
31-Jan-11 31-Jul-10
RM'000 RM'000
(j) Movements in Allowances for Losses on Loans,
Advances and Financing
Collective Impairment Allowance
At beginning of the financial period
- as previously reported - -
- effects of adoption of FRS 139 9,217 -
- as restated 9,217 -
Net allowance made 2,375 -
Amount written off (1,300) -
Exchange differences (9) -
At end of the financial period 10,283 -
As a % of gross loans, advances and financing
less individual impairment allowance 1.5% 0%
Individual Impairment Allowance
At beginning of the financial period
- as previously reported - -
- effects of adoption of FRS 139 9,440 -
- as restated 9,440 -
Allowance made 913 -
Amount written back (23) -
Exchange differences (1) -
At end of the financial period 10,329 -
General Allowance
At beginning of the financial period
- as previously reported 9,251 6,914
- effects of adoption of FRS 139 (9,251) -
- as restated - 6,914
Net allowance made - 2,343
Exchange differences - (6)
At end of the financial period - 9,251
As a % of gross loans, advances and financingless specific allowance 0% 1.5%
Specific Allowance
At beginning of the financial period
- as previously reported 13,161 8,787
- effects of adoption of FRS 139 (13,161) -
- as restated - 8,787
Allowance made - 9,276
Amount written back - (785)
Amount written off - (4,117)
At end of the financial period - 13,161
15
A12 Clients' and Brokers' Balances
As at As at
31-Jan-11 31-Jul-10
RM'000 RM'000
Clients' and brokers' balances, net of allowances for
impairment/bad and doubtful debts of RM662,000(At 31 July 2010: RM563,000) 312,611 205,994
A13 Other Assets
As at As at
31-Jan-11 31-Jul-10
RM'000 RM'000
Trade receivables, net of allowances for impairment/bad and
doubtful debts of RM371,000 (At 31 July 2010: RM488,000) 17,442 6,084
Interest receivable 17,506 17,195
Statutory deposit 150 150
Clearing Guarantee Fund 1,977 1,956
Clearing Fund 1,000 1,000
Other receivables, deposits and prepayments 21,959 11,924
Other investments 2,909 2,897
62,943 41,206
A14 Deposits from Customers
As at As at
31-Jan-11 31-Jul-10
RM'000 RM'000
(a) By Type of Deposit
Demand deposits 7,486 6,061
Savings deposits 1,263 448
Fixed deposits 599,669 582,427
Negotiable instruments of deposits 1,500 525
Other deposits 983 -
610,901 589,461
(b) By Type of Customer
Government and statutory bodies 110,000 -
Business enterprises 452,247 549,652
Individuals 45,769 36,919
Others 2,885 2,890
610,901 589,461
(c) Maturity structure of fixed deposits and negotiable instruments
of deposits
Within 6 months 596,877 579,591
6 months to 1 year 4,292 3,243
1 year to 3 years - 118
601,169 582,952
HWANG-DBS (MALAYSIA) BERHAD
(Company no. 238969-K)
NOTES TO THE INTERIM FINANCIAL REPORT FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
16
HWANG-DBS (MALAYSIA) BERHAD
(Company no. 238969-K)
NOTES TO THE INTERIM FINANCIAL REPORT FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
A15 Deposits and Placements of Banks and Other Financial Institutions
As at As at
31-Jan-11 31-Jul-10
RM'000 RM'000
Licensed banks 348,866 184,945
Licensed investment banks 70,473 183,391
Other financial institutions 1,358,255 1,163,667
1,777,594 1,532,003
Included in the deposits and placements of banks and other
financial institutions are:- fixed deposits and negotiable instruments of deposits 1,647,411 1,531,534
Maturity structure of fixed deposits and negotiable instruments
of deposits
Within 6 months 1,647,411 1,523,830
6 months to 1 year - 7,704
1,647,411 1,531,534
A16 Other Liabilities
As at As at
31-Jan-11 31-Jul-10
RM'000 RM'000
Trade payables 73,087 11,627
Interest payable 11,346 8,559
Other payables and accruals 334,735 305,484
419,168 325,670
A17 Borrowings
(a)
(b)
As at As at
31-Jan-11 31-Jul-10
RM'000 RM'000
Short term borrowings
Revolving credits 399,200 407,500
Long term borrowings - -
Total borrowings 399,200 407,500
(c)
Analysis between short term and long term borrowings are as follows:
All borrowings are denominated in Ringgit Malaysia.
Total borrowings of the Group of RM399.2 million as at 31 January 2011 are unsecured of which RM157.7
million revolving credit lines are covered by corporate guarantees issued by the Company for a subsidiary.
17
A18 Interest Income
3 months 3 months 6 months 6 months
ended ended ended ended
31-Jan-11 31-Jan-10 31-Jan-11 31-Jan-10
RM'000 RM'000 RM'000 RM'000
Loans, advances and financing * 19,531 15,383 41,128 31,010
Money at call and deposit placements
with financial institutions 7,524 5,103 13,748 9,513
Securities held-for-trading 4,889 5,935 9,686 11,166
Securities AFS 5,591 1,291 10,862 2,157
Securities held-to-maturity 6,962 7,765 13,961 15,728
Others 3,119 4,378 6,211 8,646
47,616 39,855 95,596 78,220
*
A19 Interest Expense
3 months 3 months 6 months 6 months
ended ended ended ended
31-Jan-11 31-Jan-10 31-Jan-11 31-Jan-10
RM'000 RM'000 RM'000 RM'000
Deposits and placements of banks and other
financial institutions (11,768) (6,971) (23,263) (12,545)
Deposits from customers (4,741) (3,403) (9,069) (6,581)
Borrowings (4,333) (3,124) (8,626) (6,159)
Others (2,541) (3,515) (5,196) (6,979)
(23,383) (17,013) (46,154) (32,264)
HWANG-DBS (MALAYSIA) BERHAD
(Company no. 238969-K)
NOTES TO THE INTERIM FINANCIAL REPORT FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
Individual Quarter Cumulative Quarter
Individual Quarter Cumulative Quarter
Interest income earned on impaired loans, advances and financing of the Group of which impairment
allowance has been made amounted to RM3,000 for the current quarter and financial period ended 31
January 2011.
18
A20 Other Operating Income
3 months 3 months 6 months 6 months
ended ended ended ended
31-Jan-11 31-Jan-10 31-Jan-11 31-Jan-10
RM'000 RM'000 RM'000 RM'000
Fee and commission income:
Brokerage 31,090 22,782 55,124 45,405
Unit trust management and incentive fees 14,148 10,953 24,666 20,314
Advisory and arranger fees 2,214 1,751 3,432 2,472
Underwriting commission and
placement income 1,708 635 1,907 657
Rollover fees 432 491 1,118 1,608
Service charges and fees 249 195 473 429
Other fees and commission 1,154 3,066 3,467 5,539
50,995 39,873 90,187 76,424
Net gain/(loss) on securities held-for-trading:
- gross dividends/income distributions 218 518 960 1,230
- net gain on disposal 5,830 3,674 7,362 7,464
- net unrealised gain/(loss) 1,758 (55) 6,497 1,127
7,806 4,137 14,819 9,821
Net gain/(loss) on derivatives:
- net loss on disposal (1,916) (1,093) (3,956) (1,953)
- net unrealised gain/(loss) 4,832 (1,019) 7,390 (326)
2,916 (2,112) 3,434 (2,279)
Net gain/(loss) on securities AFS:
- gross dividends 864 161 1,509 363
- net gain on disposal 984 707 1,854 2,100
1,848 868 3,363 2,463
Net gain/(loss) on securities held-to-maturity:
- net gain on disposal - - - 116
Other income:
Initial service charge 3,976 2,488 8,053 7,007
Net foreign exchange gain/(loss):
- realised 3,602 105 7,594 3,788
- unrealised (2,233) 748 (4,552) (2,018)
Rental Income 530 143 1,051 285
Others 956 808 1,621 1,470
6,831 4,292 13,767 10,532
Total 70,396 47,058 125,570 97,077
HWANG-DBS (MALAYSIA) BERHAD
(Company no. 238969-K)
NOTES TO THE INTERIM FINANCIAL REPORT FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
Individual Quarter Cumulative Quarter
19
HWANG-DBS (MALAYSIA) BERHAD
(Company no. 238969-K)
NOTES TO THE INTERIM FINANCIAL REPORT FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
A21 Other Operating Expenses
3 months 3 months 6 months 6 months
ended ended ended ended
31-Jan-11 31-Jan-10 31-Jan-11 31-Jan-10
RM'000 RM'000 RM'000 RM'000
Personnel costs:
- Salaries, allowances and bonus (24,453) (16,855) (41,708) (32,805)
- Contributions to a defined contribution plan (2,999) (2,210) (5,251) (4,314)
- Others (5,007) (3,107) (10,145) (6,226)
(32,459) (22,172) (57,104) (43,345)
Establishment related costs:
- Depreciation (2,071) (2,086) (4,088) (4,215)
- Rental of premises (1,193) (1,041) (2,380) (2,101)
- Rental of equipment (691) (670) (1,385) (1,359)
- Repairs and maintenance of premises
and equipment (413) (324) (770) (648)
- Information technology expenses (799) (679) (1,667) (1,253)
- Others (1,119) (941) (2,182) (2,055)
(6,286) (5,741) (12,472) (11,631)
Promotion and marketing related expenses:
- Promotion and business development (6,158) (3,795) (10,587) (7,413)
- Travelling and accommodation (205) (176) (379) (306)
- Others (1,981) (1,850) (3,555) (2,516)
(8,344) (5,821) (14,521) (10,235)
Administrative and general expenses:
- Professional and consultancy fees (723) (839) (1,432) (1,670)
- Communication expenses (1,373) (1,261) (2,670) (2,588)
- Incentives and commission (6,047) (4,795) (12,376) (11,249)
- Regulatory charges (2,399) (1,577) (4,251) (3,064)
- Others (2,193) (2,123) (4,051) (4,141)
(12,735) (10,595) (24,780) (22,712)
Total (59,824) (44,329) (108,877) (87,923)
Individual Quarter Cumulative Quarter
20
HWANG-DBS (MALAYSIA) BERHAD
(Company no. 238969-K)
NOTES TO THE INTERIM FINANCIAL REPORT FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
A22 (Allowance)/Write Back of Allowance for Losses on Loans, Advances and Financing
3 months 3 months 6 months 6 months
ended ended ended ended
31-Jan-11 31-Jan-10 31-Jan-11 31-Jan-10
RM'000 RM'000 RM'000 RM'000
Individual impairment allowance:
- made during the financial period (239) - (913) -
- written back during the financial period 23 - 23 -
(216) - (890) -
Collective impairment allowance:
- made during the financial period (1,787) - (2,375) -
Specific allowance:
- made during the financial period - (1,134) - (6,429)
- written back during the financial period - 284 - 519
- (850) - (5,910)
General allowance:
- made during the financial period - (182) - (751)
Bad debts:
- recovered 41 - 78 -
- written off (429) - (709) -
(2,391) (1,032) (3,896) (6,661)
A23 (Allowance)/Write Back of Allowance for Losses on Clients' Balances and Receivables
3 months 3 months 6 months 6 months
ended ended ended ended
31-Jan-11 31-Jan-10 31-Jan-11 31-Jan-10
RM'000 RM'000 RM'000 RM'000
Individual impairment allowance:
- made during the financial period (81) - (198) -
- written back during the financial period 217 - 311 -
136 - 113 -
Collective impairment allowance:
- made during the financial period (27) - (47) -
Specific allowance
- made during the financial period - (97) - (114)
- written back during the financial period - 88 - 154
- (9) - 40
General allowance
- written back during the financial period - - - 60
Bad debts:
- recovered 166 87 439 195
275 78 505 295
Individual Quarter Cumulative Quarter
Individual Quarter Cumulative Quarter
21
A24 Commitments and Contingencies
Credit Risk- Credit Risk-
Principal equivalent weighted Principal equivalent weighted
amount amount* amount amount amount* amount
RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
Commitments and contingent
liabilities
Direct credit substitutes 20,000 20,000 4,000 20,000 20,000 4,000
Obligations under underwriting agreement 55,877 27,938 27,938 - - -
Forward asset purchases - - - 25,021 25,021 11,011
Commitments to extend credits with
original maturity of (1)
:
- up to 1 year 382,704 5,460 5,460 396,455 2,172 434
- over 1 year 26,273 15,537 5,136 18,962 10,696 2,868
484,854 68,935 42,534 460,438 57,889 18,313
Derivative financial instruments
Foreign exchange related contracts:
- up to 1 year 511,798 8,053 4,643 215,642 1,747 1,148
- over 1 year to less than 5 years 359,491 38,683 12,517 280,697 21,858 9,404
Interest rate related contracts:
- up to 1 year 1,570,000 523 105 1,715,000 1,169 538
- over 1 year to less than 5 years 3,888,000 26,101 8,697 4,548,000 34,832 12,301
Credit derivative contracts
- up to 1 year 422 1 - - - -
6,329,711 73,361 25,962 6,759,339 59,606 23,391
Total 6,814,565 142,296 68,496 7,219,777 117,495 41,704
*
(1) Included in the commitments to extend credits are loan commitments of the commercial banking subsidiary, of which the credit
equivalent amount and risk-weighted amount are computed in accordance with the relevant guidelines issued by the National Bank of
Cambodia.
31-Jan-11
As at
31-Jul-10
The credit equivalent amount in respect of the commitments and contingencies of the investment banking subsidiary is arrived at using
the credit conversion factors as specified by Bank Negara Malaysia.
HWANG-DBS (MALAYSIA) BERHAD
(Company no. 238969-K)
As at
The commitments and contingencies and the related counterparty credit risk of the Group are as follows:
NOTES TO THE INTERIM FINANCIAL REPORT FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
22
A25 Other Commitments
As at As at
31-Jan-11 31-Jul-10
RM'000 RM'000
Capital expenditure commitments 9,676 13,351
Non-cancellable operating lease commitments 9,850 9,435
19,526 22,786
A26 Capital Adequacy
(a) Capital adequacy ratios
(i) HwangDBS Investment Bank Berhad ("HDBSIB")
As at As at
31-Jan-11 31-Jul-10
RM'000 RM'000
Tier I capital
Issued and fully paid share capital 500,000 500,000
Retained profits 189,230 207,984
Statutory reserve 80,132 80,132
769,362 788,116
Less: Goodwill (110,002) (110,002)
Total Tier I capital 659,360 678,114
Tier II capital
Collective impairment allowances 6,893 -
General allowance for losses on loans, advances and financing - 5,807
Total Tier II capital 6,893 5,807
Total capital 666,253 683,921
Less: Investment in subsidiaries (3,081) (3,081)
Other deductions (932) (794)
Capital base 662,240 680,046
Before deducting proposed dividend:
Tier I capital ratio 26.4% 31.6%Risk-weighted capital ratio 26.5% 31.7%
After deducting proposed dividend:
Tier I capital ratio 26.4% 30.7%Risk-weighted capital ratio 26.5% 30.8%
(ii) HwangDBS Commercial Bank Plc ("HDCB")
As at As at
31-Jan-11 31-Jul-10
Solvency ratio 108.0% 57.7%
The capital adequacy ratios of the investment banking subsidiary, HDBSIB are computed in accordance with
the Risk Weighted Capital Adequacy Framework (Basel II - Risk Weighted Assets Computation) issued by
Bank Negara Malaysia. HDBSIB has adopted the Standardised Approach for credit risk and market risk, and
the Basic Indicator Approach for operational risk.
The solvency ratio of HDCB, which is the regulatory capital adequacy ratio as prescribed by the National Bank
of Cambodia, is computed based on the net worth of HDCB divided by its risk-weighted assets and off-balance
sheet items. The solvency ratio of HDCB is as follows:
HWANG-DBS (MALAYSIA) BERHAD
(Company no. 238969-K)
NOTES TO THE INTERIM FINANCIAL REPORT FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
23
A26 Capital Adequacy (cont'd)
(b)
Net Risk-weighted Capital
exposures assets requirements
RM'000 RM'000 RM'000
At 31 January 2011
(i) Credit Risk
On-balance sheet exposures
Sovereigns/Central Banks 240,192 240,192 1,287 103
Banks, Development Financial Institutions
("DFIs") & Multilateral Development
Banks ("MDBs") 961,982 961,982 433,647 34,692
Insurance companies, securities firms
& fund managers 56,201 56,201 31,981 2,558
Corporates 1,081,472 1,081,472 636,526 50,922
Regulatory retail 237,455 237,455 236,839 18,947
Other assets 483,405 483,405 443,138 35,451
Defaulted exposures 2,746 2,746 1,584 127
Sub-total 3,063,453 3,063,453 1,785,002 142,800
Off-balance sheet exposures
Over-the-counter ("OTC") derivatives 73,361 73,361 25,962 2,077
Off-balance sheet exposures other than
OTC or credit derivatives 64,134 64,134 40,134 3,211
Sub-total 137,495 137,495 66,096 5,288
Total credit risk exposures 3,200,948 3,200,948 1,851,098 148,088
(ii) Large exposures
risk requirements - - - -
(iii) Market risk Long Short
position position
RM'000 RM'000
Interest rate risk 6,624,734 6,090,791 533,943 224,888 17,991
Foreign currency risk 712,175 687,325 24,850 24,850 1,988
Equity risk 23,118 - 23,118 62,407 4,993
Options 55,877 - 55,877 76,831 6,146
7,415,904 6,778,116 637,788 388,976 31,118
(iv) Operational risk 261,562 20,925
(v) Total risk-weighted assets and
capital requirements 2,501,636 200,131
HWANG-DBS (MALAYSIA) BERHAD
RM'000
NOTES TO THE INTERIM FINANCIAL REPORT FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
(Company no. 238969-K)
Gross
exposures
The risk-weighted assets and capital requirements of HDBSIB by class of exposure are as follows:
24
HWANG-DBS (MALAYSIA) BERHAD
NOTES TO THE INTERIM FINANCIAL REPORT FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
(Company no. 238969-K)
A26 Capital Adequacy (cont'd)
(b)
Net Risk-weighted Capital
exposures assets requirements
RM'000 RM'000 RM'000
At 31 July 2010
(i) Credit Risk
On-balance sheet exposures
Sovereigns/Central Banks 324,221 324,221 1,334 107
Banks, Development Financial Institutions
("DFIs") & Multilateral Development
Banks ("MDBs") 937,847 937,847 437,712 35,017
Insurance companies, securities firms
& fund managers 53,774 53,774 32,693 2,615
Corporates 873,618 873,618 495,295 39,624
Regulatory retail 223,130 223,130 222,713 17,817
Other assets 322,745 322,745 272,671 21,814
Defaulted exposures 1,141 1,141 603 48
Sub-total 2,736,476 2,736,476 1,463,021 117,042
Off-balance sheet exposures
Over-the-counter ("OTC") derivatives 59,606 59,606 23,391 1,871
Off-balance sheet exposures other than
OTC or credit derivatives 55,459 55,459 17,098 1,368
Sub-total 115,065 115,065 40,489 3,239
Total credit risk exposures 2,851,541 2,851,541 1,503,510 120,281
(ii) Large exposures
risk requirements - - - -
(iii) Market risk Long Short
position position
RM'000 RM'000
Interest rate risk 6,797,147 6,337,702 459,445 250,961 20,077
Foreign currency risk 328,516 256,908 71,608 71,608 5,729
Equity risk 21,047 - 21,047 57,345 4,587
7,146,710 6,594,610 552,100 379,914 30,393
(iv) Operational risk 262,024 20,962
(v) Total risk-weighted assets and
capital requirements 2,145,448 171,636
The risk-weighted assets and capital requirements of HDBSIB by class of exposure are as follows (cont'd):
Gross
exposures
RM'000
25
A26 Capital Adequacy (cont'd)
(c)
Insurance
companies,
securities
Sovereigns Banks, firms & Total
/Central DFIs and fund Regulatory Other risk-weighted
Risk weights Banks MDBs managers Corporates retail assets Total assets
RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
At 31 January 2011
0% 233,756 - - 10 616 39,796 274,178 -
20% 6,436 203,738 - 491,330 - 2,041 703,545 140,709
50% - 825,489 48,440 151,743 - - 1,025,672 512,836
100% - - 7,761 502,547 237,317 449,928 1,197,553 1,197,553
Total 240,192 1,029,227 56,201 1,145,630 237,933 491,765 3,200,948 1,851,098
Deduction from
capital base - - - - - 3,081 3,081 -
Average risk weight 57.8%
At 31 July 2010
0% 317,550 - - 48 417 29,861 347,876 -
20% 6,671 149,838 3,499 411,392 - 25,907 597,307 119,461
50% - 877,680 36,565 130,322 - 50 1,044,617 522,308
100% - - 13,710 351,856 222,713 273,462 861,741 861,741
Total 324,221 1,027,518 53,774 893,618 223,130 329,280 2,851,541 1,503,510
Deduction from
capital base - - - - - 3,081 3,081 -
Average risk weight 52.7%
Exposures after netting and credit risk mitigation
HWANG-DBS (MALAYSIA) BERHAD
The credit risk exposures of HDBSIB by risk weight are as follows:
NOTES TO THE INTERIM FINANCIAL REPORT FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
(Company no. 238969-K)
26
A26 Capital Adequacy (cont'd)
(d)
Positive fair
value of Credit Risk-
Principal derivative equivalent weighted
amount contracts amount* amount
RM'000 RM'000 RM'000 RM'000
At 31 January 2011
Commitments and contingent liabilities
Direct credit substitutes 20,000 - 20,000 4,000
Obligations under underwriting agreement 55,877 - 27,938 27,938
Commitments to extend credits with
original maturity of:
- up to 1 year 380,587 - 5,460 5,460
- over 1 year 21,472 - 10,736 2,736
477,936 - 64,134 40,134
Derivative financial instruments
Foreign exchange related contracts:
- up to 1 year 511,798 1,447 8,053 4,643
- over 1 year to less than 5 years 359,491 7,995 38,683 12,517
Interest rate related contracts:
- up to 1 year 1,570,000 268 523 105
- over 1 year to less than 5 years 3,888,000 7,290 26,101 8,697
Credit derivative contracts
- up to 1 year 422 1 1 -
6,329,711 17,001 73,361 25,962
6,807,647 17,001 137,495 66,096
At 31 July 2010
Commitments and contingent liabilities
Direct credit substitutes 20,000 - 20,000 4,000
Forward asset purchases 25,021 - 25,021 11,011
Commitments to extend credits with
original maturity of:
- up to 1 year 393,794 - 2,172 434
- over 1 year 16,532 - 8,266 1,653
455,347 - 55,459 17,098
Derivative financial instruments
Foreign exchange related contracts:
- up to 1 year 215,642 930 1,747 1,148
- over 1 year to less than 5 years 280,697 278 21,858 9,404
Interest rate related contracts:
- up to 1 year 1,715,000 764 1,169 538
- over 1 year to less than 5 years 4,548,000 12,325 34,832 12,301
6,759,339 14,297 59,606 23,391
7,214,686 14,297 115,065 40,489
* The credit equivalent amount is arrived at using the credit conversion factors as specified by Bank
Negara Malaysia.
HWANG-DBS (MALAYSIA) BERHAD
(Company no. 238969-K)
Disclosure of off-balance sheet exposures and counterparty credit risk in respect of HDBSIB are as follows:
NOTES TO THE INTERIM FINANCIAL REPORT FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
27
A27 Segmental Information
(i) Stockbroking - stockbroking, share margin financing and dealing in securities
(ii) Investment banking - debt capital markets, corporate banking, corporate finance advisory, equity capital market services and
treasury and market activities
(iii) Commercial banking - commercial banking activities
(iv) Investment management - management of unit trust and corporate funds
(v) Moneylending - moneylending activities
(vi) Others - include investment holding and other non-core operations of the Group
The segmental information are as follows:
Investment Inter-
Stock- Investment Commercial manage- Money- segment
broking banking banking ment lending Others elimination Group
RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
6 months ended 31 January 2011
Revenue
External revenue * 76,755 59,550 1,804 33,257 29,365 5,243 - 205,974
Inter-segment revenue - 913 - 23 - 31,684 (32,620) -
Total revenue 76,755 60,463 1,804 33,280 29,365 36,927 (32,620) 205,974
Net interest income/(expense) 13,114 16,704 1,503 342 22,532 (4,753) - 49,442
Other operating income 64,379 17,102 135 33,687 3,706 38,257 (31,696) 125,570
77,493 33,806 1,638 34,029 26,238 33,504 (31,696) 175,012
Other operating expense (56,507) (11,382) (2,125) (26,838) (6,591) (9,483) 4,049 (108,877)
20,986 22,424 (487) 7,191 19,647 24,021 (27,647) 66,135
(Allowance)/Write back of allowance
for losses on:
- loans, advances and financing (636) (369) (279) - (2,528) - (84) (3,896)
- clients' balances and receivables 372 133 - - - (7) 7 505
Segment profit/(loss) 20,722 22,188 (766) 7,191 17,119 24,014 (27,724) 62,744
Share of results of an associate,
net of tax 109
Profit before taxation 62,853
6 months ended 31 January 2010
Revenue
External revenue * 57,516 54,929 1,841 28,129 26,582 4,369 - 173,366
Inter-segment revenue - 866 - 20 - 16,750 (17,636) -
Total revenue 57,516 55,795 1,841 28,149 26,582 21,119 (17,636) 173,366
Net interest income/(expense) 8,252 19,192 719 188 20,926 (3,321) - 45,956
Other operating income 51,372 8,383 129 28,571 3,500 21,547 (16,425) 97,077
59,624 27,575 848 28,759 24,426 18,226 (16,425) 143,033
Other operating expense (44,678) (8,018) (2,224) (23,388) (4,052) (9,293) 3,730 (87,923)
14,946 19,557 (1,376) 5,371 20,374 8,933 (12,695) 55,110
(Allowance)/Write back of allowance
for losses on:
- loans, advances and financing (666) (3,792) (84) - (2,082) - (37) (6,661)
- clients' balances and receivables 306 (11) - - - (5) 5 295
Impairment loss on securities AFS - - - - (650) - - (650)
Segment profit/(loss) 14,586 15,754 (1,460) 5,371 17,642 8,928 (12,727) 48,094
Share of results of an associate,
net of tax (469)
Profit before taxation 47,625
HWANG-DBS (MALAYSIA) BERHAD
(Company no. 238969-K)
The Group is organised into the following operating segments:
* External revenue of the Group comprises all types of revenue derived from stockbroking, investment banking, commercial banking, investment
management and moneylending activities, rental income from property investment and reimbursement of research expenses.
NOTES TO THE INTERIM FINANCIAL REPORT FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
Upon adoption of the Amendment to FRS 8, Operating Segments on 1 August 2010, segment assets no longer form part of the segmental
information reported. The comparative segmental information has been restated to conform with the current financial period’s presentation.
28
A28 Valuation of Property, Plant and Equipment
A29 Subsequent Events
A30 Changes in the Composition of the Group
A31 Changes in Contingent Liabilities or Contingent Assets
Not applicable.
There are no material events subsequent to the end of the financial period ended 31 January 2011.
There are no changes in the composition of the Group for the current quarter and financial period ended 31
January 2011 except that on 30 December 2010, the Ministry of Commerce, Cambodia has approved the
application by a wholly-owned subsidiary of the Company, HwangDBS Securities (Cambodia) Plc to reduce its
registered share capital from Riels 40 billion, equivalent to USD10 million to Riels 20 billion, equivalent to USD5
million comprising 5 million ordinary shares at par value of Riels 4,000, equivalent to USD1 per share.
Please refer to explanatory note A24.
HWANG-DBS (MALAYSIA) BERHAD
(Company no. 238969-K)
NOTES TO THE INTERIM FINANCIAL REPORT FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
29
B.
B1
B2
B3
(a)
Commentary
Current Year’s Prospects
The stock market is expected to attract sustainable trading interests supported by the Government's
extensive transformation programme, strong liquidity, positive economic momentum and stronger Ringgit.
The buoyant stock market augurs well for the core business activities of the Group but could be dampened
by the escalating turmoil in the Middle East.
Barring unforeseen circumstances, the Board of Directors is hopeful that the Group will turn in satisfactory
results in the second half of the financial year ending 31 July 2011.
With the pick up of the local economy, capital market activities is expected to increase. Competition,
however, in the investment banking industry is expected to remain stiff. The Group will strive to build on its
investment banking business with emphasis on growth of its fee based income.
Review of Performance of the Company and its Principal Subsidiaries
Material Change in Profit Before Taxation for the Current Quarter compared with the Immediate
Preceding Quarter
The Group registered a total operating revenue of RM206.0 million for the first half year of financial year
2011, representing a 19% increase against RM173.4 million recorded for the corresponding financial period
last year. The year-on-year growth in operating revenue is largely contributed by the increase in interest
income derived from treasury and stockbroking activities, coupled with higher stockbroking brokerage
income in tandem with higher Bursa value traded of RM242.0 billion for the current financial period as
compared to RM163.8 billion in the corresponding six months ended 31 January 2010 as well as the
increase in management and incentive fees from fund management activities.
The pretax profit of the Group for the six months ended 31 January 2011 is RM62.9 million, up 32% in
comparision to the pretax profit of RM47.6 million for the same period in the last financial year. The
improvement in earnings achieved by the Group is primarily attributable to a higher marked-to-market gain
on securities and derivatives, increase in stockbroking brokerage income, increase in management and
incentive fees from fund management activities and also, reduction in loan loss impairment allowance for the
current financial period under review. These were, however, partially offset by the increase in personnel
costs as well as promotion and marketing expenses for the current financial period.
In the opinion of the Board of Directors, no item, transaction or event of a material and unusual nature has
arisen which would affect substantially the results of the operations of the Group for the current financial
period.
Compared to the first quarter ended 31 October 2010, the pretax profit of the Group for the current financial
period is 9% higher at RM32.8 million, driven by increase in stockbroking brokerage income, net gain on
securities trading and increase in management and incentive fees from fund management activities.
However, the Group's pretax profit for the current quarter was dragged down by increase in personnel costs
as well as promotion and marketing expenses, higher collective impairment loss allowance and lower net
interest income.
Explanatory Notes in accordance with Chapter 9, Part K of the Bursa Malaysia Securities Berhad
Main Market Listing Requirements
The Group will strive to tap into the growing economy in Cambodia and expand the loan portfolio and deposit
base of its commercial banking business. The Group will also continue to grow its money lending activities
as well as asset and fund management business by enhancing the net asset value of funds managed.
HWANG-DBS (MALAYSIA) BERHAD
(Company no. 238969-K)
NOTES TO THE INTERIM FINANCIAL REPORT FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
30
HWANG-DBS (MALAYSIA) BERHAD
(Company no. 238969-K)
NOTES TO THE INTERIM FINANCIAL REPORT FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
B3
(b)
B4
B5 Profit Forecast and Profit Guarantee
Statement of the Board of Directors' Opinion on Achievability of Revenue or Profit Estimate,
Forecast, Projection and Internal Targets Previously Announced
Not applicable.
Progress and Steps to Achieve Revenue or Profit Estimate, Forecast, Projection and Internal Targets
Previously Announced
Commentary (cont'd)
Not applicable.
Not applicable.
31
B6 Taxation
3 months 3 months 6 months 6 months
ended ended ended ended
31-Jan-11 31-Jan-10 31-Jan-11 31-Jan-10
RM'000 RM'000 RM'000 RM'000
In respect of the current financial period:
Malaysian income tax (9,154) (7,259) (18,867) (13,137)
Foreign income tax (9) (11) (18) (18)
Deferred tax 951 450 3,165 482
(8,212) (6,820) (15,720) (12,673)
B7 Sale of Unquoted Investments and/or Properties
B8 Purchase and Sales of Quoted Securities
(a)
Current quarter Financial
ended period ended
31-Jan-11 31-Jan-11
RM'000 RM'000
(i) Total Purchase Consideration 6,222 9,642
(ii) Total Sales Proceeds 5,119 8,900
(iii) Total Profit on Disposal 994 1,744
(b)
RM'000
(i) At Cost 18,457
(ii) At Book Value 21,271
(iii) At Market Value 21,271
There are no disposal of unquoted investments and properties for the current quarter and financial period
ended 31 January 2011.
Total purchases and disposals of quoted securities by the Group other than the investment banking
subsidiary, HDBSIB, and the profit arising therefrom are as follows:
Total investments in quoted securities held by the Group other than HDBSIB as at 31 January 2011 are as
follows:
The effective tax rate the current quarter and financial period ended 31 January 2011 approximates the
statutory tax rate.
HWANG-DBS (MALAYSIA) BERHAD
(Company no. 238969-K)
Individual Quarter Cumulative Quarter
The analysis of the tax expense for the current quarter and financial period ended 31 January 2011 are as
follows:
NOTES TO THE INTERIM FINANCIAL REPORT FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
32
HWANG-DBS (MALAYSIA) BERHAD
(Company no. 238969-K)
NOTES TO THE INTERIM FINANCIAL REPORT FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
B9 Status of Corporate Proposals
B10 Group Borrowings and Debt Securities
Please refer to explanatory note A17.
B11 Disclosure of Realised and Unrealised Profits or Losses
As at As at As at
31-Jan-11 31-Oct-10 31-Jul-10
RM'000 RM'000 RM'000
Total retained profits of the Company
and its subsidiaries:
- realised 492,621 476,296 455,612
- unrealised 3,842 5,210 4,771
496,463 481,506 460,383
Total share of accumulated losses of associate:
- realised (1,548) (1,638) (1,657)
494,915 479,868 458,726
Consolidation adjustments (6,084) (4,645) (5,270) Total Group retained profits 488,831 475,223 453,456
The disclosure of realised and unrealised profits or losses is made in accordance with the disclosure
requirements as set out in the directive dated 20 December 2010 issued by Bursa Malaysia Berhad.
There are no corporate proposals announced but not completed as at date of this announcement.
33
B12 Disclosure of Derivatives
(a)
Derivative Derivative Derivative Derivative
assets liabilities assets liabilities
RM'000 RM'000 RM'000 RM'000
Foreign exchange related contracts:
- currency forwards 1,331 (661) 584 (733)
- currency swaps 116 (460) 346 (27)
- cross currency interest rate swap 7,995 (8,752) 278 (5,239)
Interest rate related contracts:
- futures contracts 51 (18,318) 186 (23,237)
- interest rate swaps 7,507 (10,386) 12,903 (15,990)
Credit derivative contracts 1 (1) - -
17,001 (38,578) 14,297 (45,226)
Less:
Fair value of futures contracts included
in other assets (51) 18,318 (186) 23,237
16,950 (20,260) 14,111 (21,989)
(b)
Current Financial
quarter period
ended ended
31-Jan-11 31-Jan-11
RM'000 RM'000
Net unrealised gain arising from fair value changes:Derivative liabilities (2,205) (1,729)
(c)
Margin 1 year > 1 to 3
Type of Derivatives requirment or less years > 3 years Total
RM'000 RM'000 RM'000 RM'000 RM'000
(a) Principal amount
Foreign exchange related contracts
- currency forwards - 387,049 - - 387,049
- currency swaps - 124,749 - - 124,749
- cross currency interest rate swaps - - 279,854 79,637 359,491
Interest rate related contracts
- futures contracts 3,827 1,390,000 2,770,000 - 4,160,000
- interest rate swaps - 180,000 1,118,000 - 1,298,000
Credit derivative contracts - 422 - - 422
3,827 2,082,220 4,167,854 79,637 6,329,711
Disclosure of gains/losses arising from fair value changes of financial liabilities
31-Jul-10
Fair value Fair value
Derivatives are initially recognised at fair values on the date on which derivative contracts are entered into and
are subsequently remeasured at their fair values. Fair values of derivatives are determined based on quoted
market prices in active markets, including recent market transactions, and valuation techniques, including
discounted cash flow models and option pricing models, as appropriate. Derivatives are classified as assets
when their fair values are positive and as liabilities when their fair values are negative.
The net unrealised gain on derivative liabilities for the current quarter and financial period ended 31 January
2011 arose from changes in fair value of derivatives as a result of favourable movements in market interest
rates and/or foreign exchange rates relative to the terms of the respective derivative contracts.
HWANG-DBS (MALAYSIA) BERHAD
(Company no. 238969-K)
The principal amount and fair value of derivatives held by the Group at 31 January 2011 classified by the
remaining periods to maturity are as follows:
NOTES TO THE INTERIM FINANCIAL REPORT FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
As at
31-Jan-11
As at
The derivative assets and derivative liabilities held by the Group as at the end of the reporting period are as
follows:
34
HWANG-DBS (MALAYSIA) BERHAD
(Company no. 238969-K)
NOTES TO THE INTERIM FINANCIAL REPORT FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
B12 Disclosure of Derivatives (cont'd)
(c)
1 year > 1 to 3
Type of Derivatives or less years > 3 years Total
RM'000 RM'000 RM'000 RM'000
(b) Fair value
Foreign exchange related contracts
- currency forwards 669 - - 669
- currency swaps (344) - - (344)
- cross currency interest rate swap - 2,107 (2,865) (758)
Interest rate related contracts
- futures contracts (7,102) (11,165) - (18,267)
- interest rate swaps (122) (2,755) - (2,877)
Credit derivative contracts - - - -
(6,899) (11,813) (2,865) (21,577)
(d) The financial risks associated with derivatives are as follows:
Credit risk
Market risk
Liquidity risk
(e) There have been no changes since the end of the previous financial year in respect of the following:
(i)
(ii)
(iii)
B13
B14 Dividends
the types of derivative contracts entered into, the rationale for entering into such contracts and the expected
benefits accruing from these contracts except that during the current financial quarter ended 31 January
2011, the investment banking subsidiary entered into credit derivative contracts primarily to hedge against
its interest rate and foreign exchange risk exposures arising from client-related treasury activities
undertaken by the investment banking subsidiary in its ordinary course of business.
The principal amount and fair value of derivatives held by the Group at 31 January 2011 classified by the
remaining periods to maturity are as follows (cont'd):
Derivative contracts are subject to credit risk, which refers to the potential risk of financial loss arising from
defaults by counterparties in meeting their obligations. As at the end of the reporting period, the amount of credit
risk of the Group, measured in terms of the cost to replace profitable contracts is RM17.0 million (At 31 July
2010: RM14.3 million). The amount will increase or decrease over the contracted periods, mainly as a function
of movements in market rates and time.
Please refer to explanatory note A7.
Liquidity risk is defined as the risk of the Group encountering difficulties in fulfilling its current or future payment
obligations in full at the maturity date of derivatives.
Market risk is the risk of loss arising from changes in market interest rates, foreign exchange rates and equity
prices underlying derivative contracts. The contractual amounts of derivatives only provide a measure of the
Group's involvement in the respective type of derivatives and do not represent the amount subject to risk. As at
the end of the reporting period, the net exposure of the Group to market risk, which were not hedged amounted
to RM637.8 million (At 31 July 2010: RM552.1 million).
the risk management policies in place for mitigating and controlling the risks associated with these
derivative contracts; and
related accounting policies
There are no changes to the status of material litigation since the end of the last annual reporting period.
Changes in Material Litigation
35
B15 Earnings Per Share Attributable to Equity Holders of the Company
3 months 3 months 6 months 6 months
ended ended ended ended
31-Jan-11 31-Jan-10 31-Jan-11 31-Jan-10
Profit for the financial period
attributable to equity holders of the Company (RM'000) 23,176 16,840 44,670 33,141
Weighted average number of ordinaryshares in issue ('000) 255,159 255,165 255,159 255,166
Basic earnings per share (sen) 9.08 6.60 17.51 12.99
There were no dilutive potential ordinary shares outstanding as at 31 January 2011 and 31 January 2010.
By Order of the Board
Chen Mun Peng
Tan Lee Peng
Company Secretaries
Penang
28 March 2011
HWANG-DBS (MALAYSIA) BERHAD
(Company no. 238969-K)
Individual Quarter Cumulative Quarter
NOTES TO THE INTERIM FINANCIAL REPORT FOR THE FINANCIAL PERIOD ENDED 31 JANUARY 2011
36